You’re only misunderstanding them because financial literacy is so poor that there are widely held, but ridiculous, theories on what makes them move. And you have no reason to know yourself, you just hear the misinformation.
It’s pretty straight forward. When you’re 18 and obviously don’t have a history, any credit card you can get will have a low limit and you will probably need a co-signer for something like a car loan. After you demonstrate that you use these things responsibility, your limits go up, you qualify for things on your own, and your rates go down. Your credit report is just a list of these things and your score is just so lenders don’t have to read the whole thing. But they can: before medical debt was removed from these it was common for a lender to see a low score, look at why, see your only black marks were medical related, and issue an approval anyway. Many big issuers even get their own special scores tailored to their business so they don’t even have to do things like that.
We don’t have gov. sponsored restructuring but we do have a court process called bankruptcy, and there are a couple different kinds, where you can get debt beyond your ability to pay wiped out, with some restrictions. This disappears from your credit report after seven years, but it doesn’t mean you can’t get credit in the meantime, just less and higher rates.
It’s nothing more than an objective history of your credit usage so approvals aren’t subject to the whim of the issuer.
yeah see the functional difference then is the change in rates depending on the score. here the base rates need to be publically visible and lenders change them based on a “steering rate” set by the central bank in response to things like inflation or cost of living.
while we do have credit reports, the only things visible are defaults. if anyone wants more info they need to ask you for consent.
You’re only misunderstanding them because financial literacy is so poor that there are widely held, but ridiculous, theories on what makes them move. And you have no reason to know yourself, you just hear the misinformation.
It’s pretty straight forward. When you’re 18 and obviously don’t have a history, any credit card you can get will have a low limit and you will probably need a co-signer for something like a car loan. After you demonstrate that you use these things responsibility, your limits go up, you qualify for things on your own, and your rates go down. Your credit report is just a list of these things and your score is just so lenders don’t have to read the whole thing. But they can: before medical debt was removed from these it was common for a lender to see a low score, look at why, see your only black marks were medical related, and issue an approval anyway. Many big issuers even get their own special scores tailored to their business so they don’t even have to do things like that.
We don’t have gov. sponsored restructuring but we do have a court process called bankruptcy, and there are a couple different kinds, where you can get debt beyond your ability to pay wiped out, with some restrictions. This disappears from your credit report after seven years, but it doesn’t mean you can’t get credit in the meantime, just less and higher rates.
It’s nothing more than an objective history of your credit usage so approvals aren’t subject to the whim of the issuer.
yeah see the functional difference then is the change in rates depending on the score. here the base rates need to be publically visible and lenders change them based on a “steering rate” set by the central bank in response to things like inflation or cost of living.
while we do have credit reports, the only things visible are defaults. if anyone wants more info they need to ask you for consent.